Notecard #11
The idea of creative destruction is the process by which adaptation and change occur. It’s similar to firms and industries because it’s already a familiar concept in economics that can be displayed by the company Nokia. NOKIA used to manufacture rubber boots. However, the firm adapted to new opportunities because it got into the telecommunications industry. However, it has not adapted to smartphones which is why it has been overtaken by Samsung. This illustrates how if firms do not adapt, then they will be replaced with new firms that are better adapted to today’s environment – through the creative destruction process. Essentially, it’s describing how innovation allows the “new” to replace the “old.”
Coevolution represents the idea that everything and everyone in a complex adaptive system of the economy is evolving to the environment it will face. This concept is significant because it shows that complex adaptive systems are not tending towards an equilibrium of some sort – the economy is just adapting and evolving continuously. It’s also important because it reinforces the idea that “we have to experiment, learn, and adapt alongside all the other parts with which we are co-evolving.”
Notecard #6
Barden recommends promoting innovation since it’s a fundamental and key part of the adaptive process. By “promoting innovation”, he means governments should support a safety net or a national insurance scheme because people are more likely to be risk takers if they can depend on these types of safeties. Also, he says the state could help create conditions that can get firms and industries to emphasize innovation.
He follows this saying there is no point in innovation if there is no selection, and thus we should embrace creative destruction. Barden mentions we have to resist the rich and powerful elite who benefit from status quo and don’t want creative destruction. Its kind of like a feedback loop that promotes adaptation suitable to the environment.
By shaping development, Barder means that you must put pressure on economic and social institutions to evolve in certain direction that would benefit a lot of people. Society needs to shape its direction to reflect its values and beliefs.
These recommendations will all help the society to create more opportunities to help people exercise their freedoms and fulfill their dreams.